U.S. Treasury Secretary Timothy Geithner said broad, coordinated global action is key to repairing the damaged credit markets and lifting the world out of recession. He said the Obama administration wants Congress to act quickly on legislation that would give it new powers to seize financial firms whose collapse could jeopardize the U.S. economy.
Speaking Wednesday at the Council on Foreign Relations in New York, Secretary Geithner said the United States should never again be faced with having to choose between a financial meltdown and massive taxpayer bailouts. He said global financial recovery and reforms must be coordinated with the international community.
"Because we've learned that risk does not respect national borders, our plan will not focus solely on improving the basic framework in the United States. But we need the world to move with us and reach consensus on a broader set of global standards that can be applied more evenly and enforced more credibly around the world," he said.
On Tuesday, Geithner told Congress that the government must have the authority to seize non-bank entities, arguing that massive destabilizing dangers can come from financial institutions - a lesson learned from the rescue of American International Group, or AIG, a giant insurer that received a $180 billion taxpayer bailout.
Geithner is scheduled to testify to Congress on Thursday, where he will outline the Obama administration's proposals for an overhaul of the nation's financial regulatory structure. The legislation will seek to limit risk-taking at firms and would raise regulatory requirements to ensure that banks have enough money on hand to weather an economic downturn.
Geithner said President Obama will present these points at next week's G-20 economic summit in London.
"I think you are seeing, around the world, a very strong commitment to action on the global crisis. I think you look at what's happened to monetary policy and fiscal policy across the countries of the G-20, you have a lot of financial force now coming on screen," said Geithner. "If you contrast what is happening in this crisis to what we saw in the last major global crises of the last several decades, I think you are seeing more action now on a broader scale," he noted.
Europe and the United States have been at odds over ways to deal with the economic crisis, with Washington pushing the 27-nation European Union to spend more to fight it.
France and Germany said Tuesday that the G-20 summit must produce stricter financial market regulation and should not rely so heavily on stimulus spending and taxpayer bailouts.
Geithner said that one of the most tragic elements of the economic crisis has been the lack of protections for taxpayers and consumers. He said the most vulnerable and often the most financially responsible individuals have suffered the most.
The Obama administration in the coming weeks also will propose new and stronger rules to protect consumers and investors against financial fraud and abuse.